Sometimes there is a need to change the business model due to some external factors that we can’t control. This morning I read an interesting article David Linthicum who is known to track the cloud market and write about current trends. Today, he wrote about the fight between Netflix vs. Verizon and how these companies are escalating their fight of who owns the customer and whose fault is it if Netflix content does not stream well. Lets analyze the core business for both parties seen from consumer perspective. Netflix get paid by the consumer to be able to stream movies and Verizon gets paid for the consumer to use the bandwidth. The question that now remains is whether the consumer has the right to restrict the consumer what services they use, how they use it and if this creates a monopoly for Verizon in the service delivery if they force the consumer to only consume Verizon content. The same formula applies to other vendors such as AT&T U-Verse and many others. I am using U-verse in my household and if there is a day when AT&T starts to dictate my consumer behavior, I will be moving on to another service.
It is interesting to see how success always leads into trouble for the one that is successful and in this case it is Netflix. Verizon wants to block the success by restricting and causing an unpleasant user experience for the consumer. It is the consumer that pays the penalty in the end of the day. If you love Netflix, you need to have a service that supports it and you can’t have a service provider dictating your tastes. That is the old-fashioned way and the new generation of users will not tolerate this type of service delivery.
The point in this article is really to provide yet another example of a business model that is evolving and in this case I am talking about Verizon. This organization needs to realize and build its model in a way that enables consumer to see value in its service and not create artificial blocks for its customers. I do understand that Netflix is using Verizon bandwidth, but that is the same with any service that the consumer is going to utilize. Same applies to Hulu and whatever other video/movie service happens to be popular. We have seen so many drastic moves in business models the past 3 years from market leaders going under and new service provides appearing. Just look at the new transportation service Uber. Last week we heard that it is valued as much as $18 Billion dollars. Some cities are trying to block its success to protect traditional taxi and transportation service. There is a business model change happening in transportation business as well and new players will win in the end of the day as that is what the consumers are going to choose.